Form 433-B (OIC) (sp)

What Is IRS Form 433 B OIC

IRS Form 433 B OIC, often called the offer in compromise form, plays a crucial role in taxation. As a part of the civil tax procedure, this document is typically utilized by businesses experiencing financial hardships that make it impossible to meet their federal tax obligations. An offer in compromise, or OIC, allows these businesses to negotiate with the IRS, potentially reducing their tax liabilities to a more manageable amount.

How Do IRS 433-B And Form 433-B OIC differ

While the IRS Form 433 B is a routine document that businesses must submit, form 433-B OIC carries a different function with a unique purpose. Unlike the generic form 433-B, the 433-B OIC is explicitly designed for businesses seeking to accept an offer in compromise. This distinction underlines its use as a potent tool for businesses facing severe financial difficulties.

Requirements For Form 433 B OIC

Submitting Form 433 B OIC isn't a straightforward process; it comes with its set of prerequisites. Businesses must have filed all necessary tax returns and made any required estimated tax payments. Furthermore, the firm applying should not be involved in an open bankruptcy proceeding, as the IRS cannot accept an OIC under such circumstances.

Businesses must disclose comprehensive financial details, including assets, liabilities, income, and expenses. Providing accurate and updated information is crucial, as any missing or false data can lead to the IRS denying the OIC.

In addition to these requirements, businesses should also be aware of other critical aspects related to Form 433 B OIC:

• Payment of Application Fee and Initial Payment: A non-refundable application fee and initial payment may be required when submitting the form, depending on the offer's terms.
• Compliance with Tax Laws Post-OIC Acceptance: After an OIC is accepted, the business must comply with all tax laws for the next five years. Any compliance breach can lead to reinstating the original tax liability.
• Consideration of Future Income: The IRS will evaluate the potential future income of the business while considering the OIC. This assessment helps determine the reasonable collection potential of the tax debt.
• Impact on Existing Tax Liens: Even if an OIC is accepted, existing federal tax liens are not automatically released. They remain until the offered amount is fully paid and the terms of the OIC are met.
• Possible Disclosure to the Public: Under certain conditions, details of the OIC may be disclosed to the public as part of the IRS's public inspection files.

How to Fill Out Form 433 B OIC

Section 1: Business Information

Provide the company name, employer identification number, complete address, and county.

Describe the nature of your business in detail. If you are running a DBA, include this as well.

Provide your primary and secondary telephone numbers, corporate website address, fax number, and mailing address (if different from your physical address).

Write your federal contractor status.

Provide details of the total number of employees and average monthly gross wages.

Also, provide information if you use external payroll and tax preparation services.

List all significant shareholders, LLC members, officers, etc., with their Social Security numbers, addresses, positions, ownership percentages, and annual salaries.

Section 2: Business Asset Information

List all cash, checking, savings, and investment accounts. Provide bank names, account numbers, and current balances.

If you own real estate, include information such as address, date of purchase, mortgage payment, lender's name, current market value, and loan balance.

List all commercial vehicles and equipment, including make, model, year, date of purchase, current market value, and applicable loan balances.

Include additional assets such as inventory, accounts receivable, or digital assets.

Section 3: Business Income Information

Calculate and enter your average monthly gross income from various sources such as sales, services, rent, interest, and dividends.

Section 4: Business Expense Information

Detail your average monthly expenses, including materials, wages, rent, utilities, vehicle expenses, insurance, and taxes.

Section 5: Offer Calculation

Calculate the minimum offer amount you can offer to the IRS based on your